Latin America Fights “Steel Wars” Against China

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We welcome you to the Greater Caribbean Monitor (GCaM). In this issue, you will find:

•Latin America Fights “Steel Wars” Against China

•Finis Bidenis: Trump’s Mirth Is Democrats’ Anguish

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•Latin America Fights “Steel Wars” Against China
627 words | 3 minutes reading time

Since April, several Latin American countries have sought to protect their metallurgical industries by limiting the entry of Chinese steel. Within a few days of each other, Mexico, Chile, and Brazil announced massive tariffs on steel from countries with which they lack a free trade agreement (FTA), among whom China is the most prominent.

• Although no formal notification has been received, it is expected that Colombia will soon follow suit. Colombian mills, whose steel can cost twice as much as Chinese equivalents, exert daily pressure on Bogotá.

• Logically, no foreign or commerce ministry has explicitly mentioned China when justifying these new tariffs, but the design of these policies unequivocally points to fears of Chinese dumping. 

• At this juncture, Beijing does not have an ace up its sleeve. Most of the $243 billion it imported from Latin America in 2023 were commodities on which Chinese industries have grown increasingly reliant.

Between the Lines. Latin America, which tends towards protectionism, has been hesitant to defend its industries against Chinese manufactures. It is a victim of the trade war that began during the presidency of Donald Trump and that has continued, as one of the few bipartisan consensus points, during the administration of Joe Biden.

• Biden seeks to triple U.S. tariffs on Chinese steel, which stood at 7.5% at the beginning of the year. Trump, the economic nationalist par excellence, says he is considering a tax of over 60%.

• The European Union, normally given to free trade, has done the same, seeking to protect its automotive industry in the face of Chinese electric vehicles. Beijing has responded with barriers to European agricultural products. Brussels is not pleased, but deems this a fair trade.

• All this has plunged Chinese steel producers into a desperate search for alternative markets. China, one should recall, produces more than half of the world’s steel; in 2023, its production increased by 36.2%, reaching 90.3 million tons.

Panorama. All this has forced China to “dump” its steel in Latin America. Mexico is undoubtedly the most heavily affected country, hence why its, reaching up to 50% in some cases, are the highest. Chile was a little more moderate, taxing steel balls at 35.4% and steel bars and rods at 24.9%.

• In Brazil, where steel imports increased more than 30% last year, followed by 25.4% in the first quarter of 2024, the government decided to raise the tariff from 10.8% to 25%.

• The narrative in Brasilia is reminiscent of that in Washington. When announcing the barriers on foreign steel, Vice President Geraldo Alckmin spoke of the unavoidable duty to “preserve jobs” and protect the profitability of Brazilian steel mills, thus allowing them to modernize and invest in technology.

• Chile is in the greatest danger. President Gabriel Boric found it impossible to ignore the eight parliamentary resolutions urging him to protect the industry, which accounts for some 20,000 jobs nationwide, but now Santiago harbors fears that Chinese retaliation will target its copper, lithium, and fruit exports.

The Balance. Latin America is a vast and varied region. Some countries, especially the smaller ones, never achieved complete industrialization; they went directly from the agro-export model to the service economy. Others, like Brazil, did industrialize, although today they are most notable as exporters of commodities.

• Indeed, after import substitution, a form of protectionism, fell out of favor, much of the region—Mexico being, as always, the exception—has experienced a slow, almost imperceptible deindustrialization. This represents an endless source of anxiety for certain states, especially Brazil.

• The vast majority of Latin American leaders, whether left- or right-leaning, seek to reach an understanding with both Beijing and Washington and are open to business with both. 

• Mexico, for example, has become an intermediary between the United States and China, the latter of which increasingly uses Mexican factories to avoid U.S. tariffs. There is, in short, no uniform desire to decouple from China.

•Finis Bidenis: Trump’s Mirth Is Democrats’ Anguish
741 words | 4 minutes reading time

Last night, Joe Biden and Donald Trump faced off in Atlanta—not for high tea or a friendly chat, but the first of two presidential debates before the November 5 election. On this occasion, CNN hosted the event without a live audience. The next debate, organized by ABC, will be held on September 10th, though the location is still unknown.

• It was an unusual debate, starting with its unusually early summertime date; in other years, the first debate has typically been held at the end of September. 

• In any case, Trump won the debate. This can be stated without any doubt or fear of bias. Nearly all American media outlets, including those most favorable to Biden—the “liberal press” that Trump ahbors—agree that the debate was a disaster for the current president, whose position it has noticeably weakened.

The President. Biden struggled to effectively convey his key points and frequently resorted to insulting Trump, whose claims Democrats now aim to portray as false, or to quote The New York Times, “vague and misleading.” Although Biden’s performance slightly improved in the second half of the debate, he was not allowed to boast of any economic achievements.

• Perhaps his strongest point, the historically low unemployment rate, was dismantled by the former president, who claimed today’s unemployment rate came as a consequence of reforms during his time in office.

• Biden frequently lost his train of thought, prompting Trump to respond by saying, “I really have no idea what he said at the end of that sentence. I don’t think he knows what he said either.”

• After the debate, Biden’s campaign insisted that his performance was affected by a cold. If true, the leader of the free world fell ill just before the debate, as there was no prior mention of it by his campaign team.

The Former President. It cannot be said that Trump was courteous. He declared Biden the worst president in history, saying that U.S. military personnel “can’t stand this guy.” Undoubtedly, Trump treated Biden with mockery and disdain, but this behavior was common to both candidates.

• Trump appealed to a certain nostalgia for his tenure, which he attempted to cast as economically idyllic. He made a concerted effort to link Biden to crime and disorder, emphasizing the border crisis, which has brought millions of undocumented migrants into the United States.

• Regarding the contentious issue of abortion, which represents one of his weak points, Trump distanced himself from the matter. He stated that his priority was to remove the federal government from the issue; with the overruling of Roe v. Wade, he believes his role in the matter is complete, as abortion is now a state issue.

• The former president remained calm and collected. He did not appear particularly old—at 78, it is easily forgotten that he is only three years younger than Biden—but he did seem more composed. Gone are the outbursts—humorous or undignified, depending on one’s persuasion—of previous elections. It appears he paid attention to polls where 88% of Democrats and 70% of Republicans said they would like to see a more “presidential,” polite Trump in the debates.

Between the Lines. Trump has scored a point in the battle for the White House, and Biden’s political career is now at stake. The debate has brought doubts to the forefront of the Democratic Party, which now views its candidate unfavorably; rumors of this have been circulating for months, hence the far-fetched tales of Michelle Obama being the “true” Democratic candidate, but confirmation came only last night.

What Now? It remains unlikely that the party will change its candidate. Indeed, Biden would have to withdraw his candidacy and declare an open convention, something unheard of in U.S. politics, where parties have a long tradition of re-nominating their incumbent presidents.

• Biden has until August 19 to do so, as that is when the Democratic National Convention begins. That said, for the new candidate to be registered in Ohio, the matter would have to be settled by August 7.

• Perhaps it would be easier with a clear successor in mind, but both parties lack such a figure, and few would dare to enter the race in August, just two and a half months before the elections.

• Therefore, things are likely to remain as they are, although speculation will abound in the coming weeks, with Vice President Kamala Harris likely to attract attention. Despite being the most popular of candidates, she is already on the ticket, reducing the legal and financial complexities of switching candidates.